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VIEWPOINT:
KAUTILYA
Mao
to Murthy
Li Peng's
visit to Infosys shows our software strength but we should not be smug
By
Jairam Ramesh
Li
Peng's visit to Infosys in Bangalore on January 16 is the first public
show of Chinese respect for India's contemporary achievements. India's
software exports in 2000-01 will be around $6.2 billion with Infosys accounting
for about 5-6 per cent of this amount. Here, we are miles ahead of China
whose software exports annually are just about double that of Infosys.
But in other segments of the "new" economy-Internet, telecom
and PCs-we are way behind by a factor of between three and five and in
mobile telephony by a factor of over twenty. The star of the new economy
is Cisco-China accounts for about 5 per cent of Cisco's business as compared
to our share of about 0.3 per cent. If we don't watch out, China may soon
surpass us in software as well. An example of the Chinese push is the
plan to set up 100 IIT-type institutes.
Actually,
on almost every indicator China's performance is vastly superior to that
of India-and the gap is widening. Only in Kerala have we done better than
China in social development. Only in Gujarat and Maharashtra have we had
Chinese-type economic growth rates in the past decade, but neither in
Mumbai nor Ahmedabad are there visible signs of renewal or progress as
in Shanghai.
True, we
are a democracy. True, China is socially more homogeneous and less stratified.
But Chinese provinces enjoy greater economic freedom than Indian states.
American political scientist Susan Shirk has written of how policymaking
in China is a pluralistic process. Also, Pranab Bardhan, one of India's
most eminent economists, has pointed out that countries like South Korea
and Taiwan have more local-level democracy than India reflected in the
way irrigation systems have been managed. One of India's top Sinologists,
C.V. Ranganathan, once posed a troubling question: would any political
party in India emulate the National Peoples' Congress that passed a resolution
saying Mao was 60 per cent right and 40 per cent wrong?
Between
1950 and the mid-1970s, China's economic record was only marginally better.
But since 1975, China's GDP has grown at an annual average compound rate
of over 9.5 per cent as compared to India's 5.3 per cent. In 1975, China's
exports were about twice that of India; now they are six times higher.
Chinese import duties are half that of India. Industry accounts for close
to 50 per cent of the GDP in China as compared to India's 25 per cent,
showing that India is becoming a service economy without reaping the benefits
of the intervening stage of broad-based industrialisation.
Chinese
agricultural yields are two to three times higher than in India. Around
45-50 per cent of area under rice cultivation grows hybrid rice. Silk
production is of the vastly superior bivoltine variety. Arable land in
China on a per person basis is about half of that in India. This makes
its agrarian record even more noteworthy. We have outperformed China only
in milk production-perhaps only because the Chinese don't drink milk.
China simply
invests more: gross domestic investment rate has always exceeded 35-40
per cent of the GDP whereas our rates have hovered around 25 per cent.
Foreign investment is only a part of the story. Yes, foreign direct investment
into China in the 1990s has totalled close to $300 billion as compared
to about $15 billion in India. More basically, domestic resource mobilisation
itself has been greater and that is the key.
The Chinese
have excelled in labour-intensive mass manufacturing-textiles, electrical
and electronic goods, sports goods, toys, plastic goods, leather goods
and consumer items. Chinese exports of this basket are almost eight times
that of India while they were on a par with each other just about a decade
and a half ago. We have been handicapped by the Gandhian legacy that devalued
mass production and hamstrung by our extraordinary emphasis on heavy industry.
Indian civilisation has been more knowledge-based but our social system
has prevented the diffusion of knowledge. On the other hand, the Chinese
have been more application-oriented and gave the world the magnetic compass,
gunpowder, printing press, paper, cast iron, the harness, the suspension
bridge and numerous other inventions.
China has
gained immeasurably more from its diaspora, particularly in Hong Kong
and Taiwan, which together account for three-fourths of the foreign investment
flowing into the mainland. The diaspora has also boosted exports. On the
other hand, hapless Indian workers in the Middle East do more for India
by way of remittances than their vastly more privileged counterparts elsewhere.
Ultimately,
where the Chinese have scored over us is in their pragmatism, exemplified
in Deng Xiaoping's aphorism,"What does it matter if the colour of
the cat is black or white as long as it catches mice?" In India,
we get stuck in wholly useless debates on the nature of the cat while
the population of mice proliferates.
(The
author is with the Congress party. These are his personal views.)
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